Industrial property prices to slip 3% in 2015

Properties with shorter tenures are more vulnerable.

Overall industrial property prices could decline by up to 3% in 2015, a report by Colliers International revealed today.

The report stated that rents for multi-tenanted developments may ease further due to mounting supply pressures.

However, rents for properties with higher building specifications, such as those located within the business parks, and independent high-specs buildings could see some upside potential due mainly to
a tightening in supply.

In the strata-titled industrial property sales segment, transaction activity is likely to remain subdued at below the 2,000-unit level unless the gap in price expectations between buyers and sellers can be bridged.

On the other hand, demand for specialised and niche developments like food factories, which are limited in supply, are expected to remain healthy.

“Overall industrial property prices could ease by up to 3 per cent in 2015. However, prices of industrial properties with longer land tenure – those with freehold/999-year leasehold and 60-year leasehold tenures – which are limited in supply, are generally expected to hold up better than those of shorter 30-year leasehold properties in 2015,” said Chia Siew Chuin, Director of Research & Advisory at Colliers.